Monday December 26 2016 Housing and Economic stories

TOP STORIES:

Italy Banking Crisis is Also a Huge Crime Scene - (www.wolfstreet.com) The Bank of Italy’s Target 2 liabilities towards other Eurozone central banks — one of the most important indicators of banking stress — has risen by €129 billion in the last 12 months through November to €358.6 billion. That’s well above the €289 billion peak reached in August 2012 at the height of Europe’s sovereign debt crisis. Foreign and local investors are dumping Italian government bonds and withdrawing their funding to Italian banks. The bank at the heart of Italy’s financial crisis, Monte dei Paschi di Siena (MPS), has bled €6 billion of “commercial direct deposits” between September 30 and December 13, €2 billion of which since December 4, the date of Italy’s constitutional referendum.

Gone in 60 Seconds: Chinese Snap Up Dollar Funds as Yuan Tanks - (www.bloomberg.com) Chinese savers, eager to convert their yuan before the currency keeps depreciating, are snapping up U.S. dollar investment products that offer options for keeping money at home instead of sending it overseas. The latest wealth management products from China Merchants Bank Co. in Shanghai last week, paying 2.37 percent annual interest on U.S. dollars, sold out in 60 seconds flat. "You won’t be able to get it online because it’s gone in less than a minute," said a branch manager, who would only give the surname Xu, and encourages customers to book a day in advance next time.

Companies Face Delays Getting Cash Out of China - (www.wsj.com) French construction-materials company Cie. de Saint-Gobain SA, is finding it harder to take its money out of China. The conglomerate—like all multinationals operating there—faces new delays in recent weeks as Chinese regulators impose tougher restrictions on the movement of capital out of the country to slow the yuan’s decline. “The process of authorization is going to become longer now,” said Javier Gimeno, who heads Saint-Gobain’s China operations. “The procedures will be controlled more strictly.” Nearly 7% of Saint-Gobain’s world-wide group sales come from Asia and Oceania, a large part of that from China. The new rules are adding confusion and anxiety to a process that had been getting much easier over the past year, he said. The shift could cause some multinationals to rethink future investments in a country where once-sure payoffs are suddenly facing an uncertain return, analysts say.

Key HK renminbi lending rate stuck at exactly 10% for second straight day - (www.ft.com) A key lending rate in Hong Kong for renminbi lending has dug its heels in at 10 per cent, unchanged from Friday’s unusually round level. The Hong Kong interbank borrowing rate for offshore renminbi (CNH) overnight loans (CNH Hibor) had dropped 1.76367 percentage points to be exactly 10 per cent on Friday. The level was still five times higher than the high end of the overnight rate’s usual range of 1 to 2 per cent. Analysts have voiced suspicions that spikes in CNH Hibor this year may have reflected intervention by The People’s Bank of China to sop up liquidity in the offshore market, thereby driving up the cost of betting on continued renminbi devaluation.

"Everyone Is Nervous" - Chinese Bond Bloodbath Reawakens As Hong Kong Stocks Turn Red For 2016  (www.zerohedge.com) After a brief respite, the bloodbath in Chinese bonds is back, with futures plunging back to lows overnight amid liquidity fears (short-term lending rates are inverted) and growing anxiety over China's almost unprecedented debtload. As The Wall Street Journal reports, a gradual tightening of short-term credit by China’s central bank - combined with rumors of liquidity squeezes at brokers - prompted a mini-rout in the country’s $8 trillion-plus bond market last week, forcing authorities to reverse course and inject some $86 billion in short- and medium-term funds. China’s total debt surged to around $27 trillion this year, or 260% of gross domestic product, compared with 154% in 2008 at the start of a stimulus program to offset the financial crisis. It is continuing to grow at more than twice the pace of the economy.

OTHER STORIES:

Four Years of Living Dangerously: CEOs Brace for the Trump Era - (www.bloomberg.com)
China Must Curb Speculation Amid Bubble, Top Official Says - (www.bloomberg.com)

Bond Selloff Shows Risks of China’s Efforts to Restrain Credit - (www.wsj.com)
China’s bull market in bonds on borrowed time - (www.ft.com)

Investors betting on more US-Japan divergence - (www.ft.com)
ECB’s New Dilemma: Neediest Nations Receive Less Stimulus - (www.wsj.com)